OIL RESOURCES

Evening Star, Issue 22808, 17 November 1937, Page 7

OIL RESOURCES

PROVISION FOR INTENSIVE SEARCH

OWNERSHIP VESTED IN GROWN IMPORTANT BILL INTRODUCED [From Odr Pllroamenta.es Reporter.] * WELLINGTON, Nov. 16. A more intensive search for oil supplies' in the Dominion appears to be foreshadowed by the provisions of the Petroleum Bill, which was introduced in the House of Representatives by Governor-General’s Message , to-night. The Bill is a comprehensive measure of 47 clauses and covers exhaustively all aspepts of oil prospecting and mining. Probably the most important provision in the Bill is that vesting jn the Crown the ownership of all petroleum existing in its natural condition on or below the surface of afiy land in New Zealand. It is also laid down that prospecting and mining for petroleum can only be carried on : pursuant to licences granted under the new legislation by the, Minister of Mines, although existing rights may remain in force for a period of 12 months. In cases where persons have already entered into agreements with the owners of lands for the prospecting and mining of ■ oil, notice of such agreements must be given to the Under-secretary of Mines, and , any person giving notice will have a preferential right for three months after the legislation comes into force to obtain prospecting or mining licences. Agreements with landowners entered into since December of last year, however, will not be recognised unless they are renewals of previous agreements. Conditions of Licence Prospecting licences will not apply in any individual case to an area greater than 200 square miles, and the term of each licence will be for five years. The Minister may impose conditions in the granting of a prospecting licence, and the licensee will be required to interfere as little as possible with the occupation and use of the land by other persons who have a right to use or occupy it. A deposit of £IOOO will be required from each holder of a prospecting licence as security for compliance with the terms and conditions of his licence. An annual fee of 5s for each square mile in area covered by the prospecting licence will also be required by the Government, and this sum will be payable by the licensee half-yearly in advance. .- . • When a prospecting licence nas been granted, the holder will be required to commence an investigation of his area within three months, and to continue his investigation until such time as he commences drilling operations. The drilling of at least one well must be commenced within two years, and the drilling of each well must be continued until it becomes productive or, until it can ' be proved to the satisfaction of the Minister that it is unproductive. The time fixed for the starting of drilling operations may be extended by the Minister if the licensee is carrying out an investigation of the land covered by his licence and at the same time is engaged in drilling on land covered by some other licence. Mining Operations Mining licences are to be issued entirely distinct from prospecting licences. A mining licence will cover a maximum area of 100 square miles, and will be for a maximum term of 42 years, although renewals will be permitted to bring the term up to 63 years in the aggregate. As with prospecting licences, conditions may be .imposed by the Minister, and the holder of a licence will have to i renew; his undertaking to interfere as little as possible with the normal use of the land. The holder of a prospecting licence •who has complied with the conditions of his licence will have a preferential right to obtain a mining licence, but the granting or renewal of mining licences will be at the discretion of the Minister. Monetary deposits will also be required by the Government in case of mining operations. > As security for compliance with the conditions of a mining licence, the licensee will have to pay a de- . posit of £2O per square mile for land in his area, with a minimum deposit of £250, and, in addition, an annual fee of £lO per square mile will be required, payable halfyearly in advance. Destination of Royalty The Bill also provides for the payment of a royalty to the State in the event of mining operations proving successful. The royalty is to be at the rate of not less than 5 per cent, of the selling value of the crude petroleum, casing, head spirit, and natural gas produced; and the actual rate of the royalty is to be fixed by the Minister when the licence is granted. The selling value is to be agreed upon by the Minister and _ the licensee, or, failing agreement, is to be determined by arbitration. No royalty will be payable on petroleum products used in production or unavoidably lost. Internal Marketing Another important provision requires all petroleum produced to be refined and sold in the Dominion until the requirements of the internal market have been met. If at any time there is a surplus the provision of the Bill in this direction may be relaxed by the issue of regulations. The Minister is to be empowered to extend the area of a licence by including adjoining lands provided that the maximum area is not exceeded. No licence may be sold, transferred, assigned, or sub-let without the consent of the Minister, although a licensee will be permitted to surrender a licence before its expiry as. long as he inlets all the

liabilities incurred up to the date of surrender. The Minister is to be given power to revoke licences in cases where there has not been reasonable compliance with the conditions. Right to Enter Land A licensee is to have full right of entry to the land comprised in his licence, but mining operations will be prohibited on or under any road or street. There are also restrictions on the right of entry to scenic reserves, tourist and health resorts, cemeteries and land held by the Crown for public purposes, except with the consent of the Minister, and also to small domestic areas except with the permission of the occupier. The owners and occupiers of all land are to be protected in that compensation will have to be paid or tendered before entry. This provision applies also to Crown lands. A licensee is to be required to give the occupiers of land other than Native land 14 clear days’ notice in writing of his intention to enter. In the case of Native land, 28 days’ notice must be given to a Native Land Court. No compensation is to be payable to a licensee for improvements which he has effected in the land comprised in his licence, but a licensee will be permitted to remove buildings and machinery. There is also provision that land may be taken under the Public Works Act if it is required for mining operations. All expenditure in such cases is to be met by the licensee. Event of Emergency In the event of war or at other times when such a course may be necessary in the public interest, the Government is to be empowered to seize petroleum products or petroleum and the works associated with the industry. The Minister is also to be authorised to carry on mining operations for petroleum or to deal in petroleum if the necessity arises. In cases were Native land is affected by any licence and a request is made for action by the licensee or by the Native owners and occupiers, the Maori Land Board of the district is to be empowered to act in all respects on behalf of the Natives concerned. An Economic Precaution * Another clause in the Bill is designed to prevent wasteful and uneconomic drilling by rival concerns operating on adjoining or adjacent aireas. In such cases licensees will be required to submit to the Minister for his approval a joint scheme of development, and if they fail to do so the Minister himself will be empowered to prepare a scheme. Machinery clauses are included dealing with the appointment and duties of the inspectors, the serving of notices, the lodging of deposits by licensees, and the making of regulations. It is stipulated that the desions of the Minister in all matters affected by the legislation will not be subject to appeal, and will not be liable to proceedings in any court except on the ground of lack of jurisdiction. The portion of the Mining Act which at present governs prospecting and mining for petroleum is repealed.

HINDRANCES REMOVED PROVISION FOR EXHAUSTIVE SEARCH COMPENSATION ASSURED [From Our Parliamentary Reporter.] WELLINGTON, November 16. The introduction of the Petroleum Bill in the House of Representatives tonight was the signal for a rapid volley of questions from the Opposition benches, which gave an indication of the tremendous interest provoked by the Government’s plans for development of the oil resources of New Zealand. Difficulties which have previously hindered a real and exhaustive search being made for petroleum are removed by the Bill. The Minister of Mines (Mr Webb), who was in charge of the measure, indicated to the House that prospecting foroil was an extremely costly and hazardous speculation, and could only be carried out by persons or organisations possessing abundant capital and experienced and expert staffs. He said the provisions of the Mining Act, 1926, which at present governed prospecting and mining for petroleum, were not sufficiently encouraging to attract prospecting on an adequate scale. In reply to the Leader of the Opposition (Mr Hamilton), the Minister said that all oil existing in its natural conditions, whether on Crown, Native, freehold, or other land, would be vested in the Crown. This made it practicable to meet the two greatest difficulties of the past the granting of licenses over sufficiently large areas, and the troubles involved in respect of the payment of royalties. Under the Bill royalties would be paid to the Crown only. The measure was framed on the English Act of 1934. Victoria and West Australia had also followed the British legislation. Mr Coates asked whether the Bill made provision for compensation on the same basis as the British Act, and whether only new fields were to be affected by _ the new legislation. He also inquired whether existing rights would bo interfered with. COMPENSATION FOR ALL LOSSES. In reply, the Minister said that all oil was involved under the Bill. Mr Coates; All oil? • Mr Moncur: Even neck oil. Mr Coates asked how the Bill would affect freehold rights, and the Minister ■replied by saying that the interests of landowners would be protected and compensation would be paid for all loss suffered by them. Replying to another question, Mr Webb said that compensation was not payable for any petroleum known or supposed to be in or or under any land. Compensation was to bo paid or tendered, or security given, to all owners or occupiers before entry was made on the land. Tn addition, occupiers were also to receive'notice in writing before entry was made to their property. The fact that there were two races of people in New Zealand compared with one in England was stressed by Mr Coates, who said that certain rights had been conceded to the Maoris by the Treaty of Waitangi. Petroleum was not contemplated then, and no member of this House would flagrantly interfere with rights conceded under the Treaty,

Mr Christie; A good Government is in now. Mr Coates:' It is not a question of good Governments or not. _ It is a question of how this House will act. Mr Smith asked whether the Bill cancelled all rights and agreements for boring now in existence. Mr Webb; The Bill provides for the granting of licenses. Mr Smith: And for rights under agreement at present, too? The Minister said that complete possession of all oil rights was provided under the Bill. Answering a question by Mr Forbes, the Minister said the Government would encourage any company or any person with sufficient capital, knowledge, and equipment to do the prospecting workin New Zealand. The Bill was read a second time pro forma and referred to the Goldfields and Mines Committee.